A tax deduction is the amount reduced from your taxes when you pay it forward. Usually, the taxpayer pays these amounts from their pocket, which they can claim from the paid tax amount. These payments decrease your taxable income and increase the part of the tax refund. 

You can claim work-related expenses in your tax return – like uniforms, cost of machines, or travel for work. During the COVID – 19 period, many people were doing work from home. In this period, many people claimed home office expenses as tax deductions – which the Australian Taxation Office (ATO) will pay at 80 cents per hour rate. However, to ensure that your refund doesn’t reduce than what you would get at the original rate – you need to talk with the most skilled tax agents Perth.

Is the whole tax-deductible amount refundable? 

The ATO does not offer a 100% return on the tax-deductible items or services but a percentage of the costs. The rate depends on the product or services. Your taxable income gets reduced – so you pay fewer taxes on your income, and your refund increases. However, if you are claiming deductions for products or services that you use for both work and personal purposes, you can only claim a return for the portion used for work.

• The way tax deductions work.

So, you can get some of the costs incurred by working from home offset by the tax deductions. However, there are specific rules and regulations to apply for these work-related deductions. You can claim these work-related deductions only if:

• You have evidence to prove it.
• You have not received reimbursement already.
• You have spent the money from your pocket.
• The expense must be job-related. 

It is better to take the help of an accomplished accountant to calculate the taxes to get the most refund correctly. 

The claimable tax deductions 

Typically, everybody knows that ATO allows a certain percentage of deductions for the use of work-related equipment like mobile phones, cars, and computers. However, the deductions are not universal but applicable only if the taxpayer meets certain conditions. The requirements are listed below:

• Vehicle and travel expenses:

You can claim the work-related travel expenses if you use your car to do business activities. There are several methods to use for claiming these expenses – your accountant can help you utilize them while claiming for tax deductions. You must own the car and keep a detailed record of its use to claim the deductions. 

However, you cannot claim the cost of travelling to and from work daily because it is considered private travel. Moreover, you also cannot claim the cost of regular trips to and from work as its travel even if:

1. You do a minor work-related activity, like picking up the mail.
2. You travel back to work for a security call-out or from a parent-teacher meeting.
3. You work more than the required hours, and no civic transport is available to get you home.

The most important thing for claiming travel expenses is keeping detailed records of the payments – as it would help in calculating the tax deduction.

• Work-related clothing and expenses

You can claim deduction on clothing only if it is specific to the profession—for example, a welder’s overalls or chef’s pants. You cannot claim deductions if the dress is not particular to your job, including black pants and white collar shirts. However, you can claim clothing that protects you from injury or illness. Like, you can claim sun protection if you work maximum time in the outdoors. 

You can also claim uniforms or clothes specified by companies if the company logo or the company policy mentions it. The tax laws allow workers to wear clothes that their employer determines or notes in their company policy. 

• Deductions for working from home

You can claim a portion of the home office expenses as a tax deduction if you are partly or wholly working from home. You can claim the following deductions for your home office:

1. Ideally, you should have a separate room for completing your employment activities and are eligible to receive a portion of the expenses incurred. However, it is not mandatory – but if you use another room for this purpose (like a dining room or a lounge), you can claim expenses only for the time you had exclusive access to the room. 
2. If you work from home, you get deductions for peripheral expenses. You can claim the use of computers, telephone, or other electronic devices you need for work. You can also include any running cost for electrical appliances. 
3. You can claim up to AUD 300 for home office equipment or a decline in cost for items costing AUD 300 or more. You can also claim the part of your phone bill used for your office work as a work-related expense.
4. You will have to keep a detailed record of the expenses. 

• Using mobile phones for work

You can also claim cost deduction if you use mobile phones for your job and have evidence of paying for these costs. If you use the phone for work and private purposes, you have to determine a reasonable percentage of the time you use the phone. You cannot, however, ask for the amount your employer has already reimbursed. 

You will need to work out a typical four-week period to calculate the deduction from some point in the tax year. If you have a phone bill that provides itemized costing, you will need to determine your usage for those four weeks for work, calculate the percentage, and apply it to the entire year. You would need to claim reasonably – you should consult with the accountant for a trust tax return.

• Trade union fees, magazine subscriptions, and professional associations

You need to have an association membership due to your profession – you can claim the membership fees. It is the same as trade unions also. Magazine subscriptions can be very helpful in increasing your claim. Although the magazines or publications should be related to your work – for example, you can claim for financial publication and research services. You can pay the following year’s fees before June 30 and claim the deduction. 

Taking informed suggestions

You can also claim a deduction for other expenditures like gifts, donations, Interest and investments, self-education costs, and many more. As the reasoning process is complex, and you need to determine the parts you can claim correctly, it is best to take the professional assistance of a skilled accountant or an experienced tax lawyer.